We study how enhancers activate transcription in the chromatin environment of eukaryotic cells during development and differentiation. Globin genes provide a rich system to investigate this question. The locus control region (LCR), encompassing four erythroid-specific DNase I hypersensitive sites, regulates expression of the BETA-globin genes by decondensing the chromatin structure of the entire locus, and activating transcription of the globin genes sequentially during development. We used a minichromosome system to look at the structure of a model epsilon-globin gene in chromatin in either a transcriptionally active or inactive state. Without an activation element (HS2 or muLCR) in the minichromosome, epsilon- globin is transcriptionally inactive and nucleosomes are positioned over the epsilon-globin gene. However, when the muLCR or HS2 is included, activation of epsilon-globin transcription occurs and the nucleosome positioned over the proximal promoter is lost, consistent with the idea that transcription factors can exclude a canonical nucleosome from DNA. When epsilon-globin transcription was active, virtually all minichromosome molecules were cleaved by DNase I at both the promoter and the HS2 site supporting a looping model for enhancer- promoter interaction in which these regulatory elements physically interact with one another. Globin promoters and HS sites contain binding sites for a restricted group of activator proteins which mediate HS site formation and are thought to interact directly or indirectly to effect enhancer-promoter interaction. To dissect how the HS sites form and communicate with promoters, we mutated motifs for these DNA binding motifs singly and in groups. Transcriptional activation and promoter remodeling, as well as formation of the HS2 hypersensitive structure itself, depended on the presence of the NF-E2 binding motif in HS2. Other mutations had more subtle effects consistent with a combinatorial role for transcription factors in gene activation. We continue to explore the mechanism of action of the LCR and the regulatory role in vivo of chromatin structure in the expression of globin genes.